When ‘Made in Israel’ Is a Human Rights Abuse

Just before Christmas, Ron Dermer, Israel’s ambassador to the United States, sent the White House a box of holiday gifts with a pointed political message. Inside were items (body lotion, halvah, olive oil) produced in Jewish settlements in the West Bank. Or rather, as Mr. Dermer put it in an accompanying letter, in Judea and Samaria — the term used by religious nationalists who see the settlements as no less a part of Israel than the Galilee or Tel Aviv.

From a biblical perspective, this view may be tenable. From a legal and moral perspective, it is not. As documented in a new report by Human Rights Watch, Israel’s occupation has grown into a lucrative business, exploited by companies as part of a system that is unlawful and abusive.

Like the settlers, these enterprises receive benefits from the Israeli government — preferential access to land and water, low rents — that make the occupied territories an alluring destination. It is another story for Palestinians, who are routinely denied permits to open their own businesses, cut off from their land and hemmed in by restrictions that, according to the World Bank, cost the Palestinian economy $3.4 billion a year.

All of these businesses are operating on illegally occupied land. A significant amount of land, it turns out. There are roughly 1,000 factories in the chain of Israeli-administered “industrial zones” strung across the West Bank. The geographic footprint of these commercial enterprises, together with shopping centers and agricultural projects, exceeds the built-up areas of settler housing.

Some Israeli officials have argued that Palestinians benefit by working in settlement businesses, producing what one factory owner calls “goods of peace.” But many work in settlements only because Israel’s stifling of the Palestinian economy has deprived them of alternatives. Because the government rarely conducts labor inspections, Palestinian workers often earn less than the Israeli minimum wage. If workers complain, employers sometimes retaliate by fabricating a “security incident” that will deprive Palestinians of their work permits, according to the H.R.W. report.

To view goods made under these conditions as no different than products made within Israel requires going blind to such indignities. Unfortunately, that is exactly what new legislation that will soon land on President Obama’s desk would require the United States government to do. Under a provision of a larger piece of legislation, popularly known as the Customs Bill, that has been approved by the House and is expected to soon pass the Senate, American officials will be obligated to treat the settlements as part of Israel in future trade negotiations.

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The ostensible reason this provision was added to a bill on international trade is to combat the Boycott, Divestment and Sanctions movement, a grass-roots campaign that seeks to pressure Israel to change its policies toward the Palestinians. But under existing law, Washington already forbids American companies to cooperate with state-led boycotts of Israel. Under the guise of an antiboycott provision, the Customs Bill extends similar protections to “Israeli-controlled territories” — meaning settlements. For American trade negotiators, the industrial zones dotting the occupied territories would have the same status as the high-tech industry in Tel Aviv, just as settler zealots insist.

This potential, and largely unnoticed, shift in American policy comes just as frustration with the stalled peace process and Israel’s deepening grip on the occupied territories is leading to more targeted pressure on Israel’s settlements. This month, the pension board of the United Methodist Church decided that five Israeli banks that fund construction in the settlements are ineligible for its investment. In November, the European Union, Israel’s largest trading partner, declared that products made in the occupied territories should be labeled separately from Israeli goods.

As the H.R.W. report makes clear, these steps are consistent with international law. Since all companies that do business in or with settlements inevitably contribute to human rights violations, they should stop. And since no country recognizes Israeli sovereignty over the occupied territories, all of Israel’s trading partners should insist that the label “Made in Israel” be removed from products from the settlements.

The Palestinian Authority has described separate labeling of settlement goods as a useful step. (The authority supports boycotting these goods.) Not surprisingly, the government of Prime Minister Benjamin Netanyahu disagrees. In the letter Mr. Dermer sent to the recipients of his holiday gifts, he claimed that the European Union’s push to differentiate settlement products casts Israel as a “pariah state.” He neglected to mention the petition signed by over 550 prominent Israelis that welcomed the union’s decision and called on other nations to follow suit. Among the signatories was Avishai Margalit, a former recipient of the Israel Prize in philosophy, and Avraham Burg, a former speaker of the Israeli Knesset.

The Obama administration has made it clear that it does not accept the conflation of the settlements and Israel. When the Customs Bill reaches his desk, Mr. Obama may take the rare step of issuing a signing statement objecting to its pro-settlement language. But if this provision becomes law, it will be a major victory for the Israeli right, albeit one that it may come to regret. The more the line between Israel and the occupied territories is blurred, the more likely the rest of the world will be to question the legitimacy of not just the settlements but Israel itself. In the long run, this will not prevent Israel from being depicted as a pariah state, but instead will provide powerful ammunition to those who see it as such.

Eyal Press is the author of “Beautiful Souls: The Courage and Conscience of Ordinary People in Extraordinary Times.”